Many studies have been published
purporting to prove smoking bans in bars and restaurants are either good or
neutralfor business, and
conflicting studies have also been published purporting to prove bans are bad
for business. Scollo, Lal, Hyland and Glantz recently summarized many of these
studies, concluding those which find no economic impact are published in the
peer-reviewed scientific literature and funded by “objective” antitobacco
interests, while those that do find bans hurt business are funded almost
universally by Big Tobacco or its allies. Tobacco Control, 2003;12:13-20.However,
the objectivity of those who publish studies finding smoking bans don’t hurt
business is also questioned because they are funded by groups with clear and
open objectives of promoting smoking bans.

One common problem with many studies of
smoking bans is that the time-span studied before and after a ban goes into
effect is too small to accurately measure the ultimate impact of such bans. For
example, long before state bans go into effect, many local governments have
passed bans that affect business, and long before local governments pass bans
many restaurants voluntarily ban smoking. For example, we obtained a copy of California Smoke-Free Cities Bulletin , October, 1993 which was
developed with the support of the California Department of Health Services.The “Fact Sheet” summarizes that by the
publication date, 8,668,235 Californians, or 27% of the population lived in an
area whose local government had a 100% ban on smoking in restaurants.Further, 62 cities and nine counties had
ordinances requiring 100% smoke-free restaurants, and 295 cities had ordinances
restricting smoking.In addition,
many more restaurants had voluntarily banned smoking in areas not covered by an
ordinance.Long before the state
restaurant smoking ban took effect, in 1995, many Californians did not have the
option of dining in a smoking environment.Therefore, in this example, we would expect total California bar and
restaurant revenue to decline years before the state ban took effect, and
studies which typically only measured data collected one year before that
state ban would not have measured the entire economic impact of the loss of
smoking accommodations in California’s restaurants.

After a ban goes into effect, some establishments violate
bans, others find ways to skirt bans, and some establishments are granted
exemptions. Sometimes, bans are not immediately enforced by public officials.
Some establishments raise prices to offset lost business which can temporarily
mask the revenue effects of bans, and some smokers continue to patronize
affected establishments until they adopt other socializing habits that don’t
involve patronizing the affected establishments. For these reasons,
measurements of the economic impact of smoking bans must also consider that
some smoking accommodations can remain available after smoking bans take
effect, and data must be collected longer than the one year after a ban takes
effect in order to accurately measure the effect of a ban.

We further question why studies on both
sides of the issue most often utilize data related to sales tax revenues
collected from bars and restaurants, or employment data of those workers who
work in bars and restaurants.We
agree such data would be useful if the studies were exploring the relationship
between smoking bans and tax revenues collected by various taxing authorities,
or if they were exploring the relationship between smoking bans and employment
in bars and restaurants. Very few studies
actually utilize data of gross sales received by bars and restaurants in
business before and after bans take place, which would , naturally, be of most
concern to those who own bars and restaurants.

One recent claim even capitalized on the
9-11 disaster in New York Cityto
“prove”bans don’t hurt business.
It claimed the city’s March 2003 ban was good for business because the city’s
“bars and restaurants paid the city 12% more tax revenues in the first six
months after the smoke-free law took effect than during the same period in
2002.”Flyer: SMOKE-FREE LAWS DO NOT HARM BUSINESS AT
RESTAURANTS AND BARS , Campaign for Tobacco-Free Kids1400 I St. Suite 1200, Washington DC.
The same period they refer to in 2002 was from March 2002 to September 2002,
when many Wall Street businesses were operating in New Jersey due to the
disruptive clean-up of the World Trade center site, and tourists were avoiding
NYC, many fearing another possible attack.Mayor Guiliani appeared on television and asked nonessential personnel to
avoid the area. Estimates were publicized in the media that the9-11 disaster cost NYC in excess of $50
billion in business, in late 2001 and 2002; much, certainly was lost by bar
and restaurant businesses situated near the attack site. In 2003, Wall Street
businesses, residents, and tourists returned to NYC and comparing 2002 to
2003, ban or no ban, cannot be valid without controlling for the effects of
the attack.

Those who conduct these studies should
rely on long term total bar and restaurant revenue data because they are a
direct measurement of how much money was spent by customers in bars and
restaurants, and such data are readily available from the U.S. Dept of
Commerce.Comparing these
revenues to total retail trade data controls for the spending power of the
public, as evidenced by the data from the other retail sectors. For example, if
a recession occurs at the same time as a ban takes effect, a researcher can
adjust retail bar and restaurant revenue data for the effects of the recession
using total retail sales numbers.During the period from 1990 to 1998, The U.S. Dept. of Commerce published
such data through the Census Bureau’s annual periodical Statistical Abstracts of the United
States.These editions
are available in the reference sections of better libraries, because these
references are considered to contain the best data available. These data we
will utilize are also available on the web, at www.census.gov. During this
period, the Dept. of Commerce reported data using the Standard Industrial
Classification code to define bars and restaurants. After 1998, the Dept of
Commerce adopted the North American Industry Classification System and
cautions comparisons with the SIC system may not be valid. This is why we
limit our analysis to the period 1990 to 1998.

States’ Bar and Restaurant Revenue Losses With Smoking
Bans

In 2000, the Connecticut Office of
Legislative Research published a report classifying states as either
smoker-friendly or smoker-unfriendly in terms of bar and restaurant smoking
restrictions.A state was
classified as smoker-unfriendly if bans had been imposed at the state level or
if many local governments had severely restricted or eliminated smoking in bars
and restaurants, even if the state had not.www.cga.ct.gov/2000/rpt/olr/htm/2000-r-0890.htm

These states are tabulated below, along
with the United States, overall, as reported by the U.S. Dept of Commerce. All
data are in billions of dollars and not inflation adjusted. The 1987 data are
also included to demonstrate growth was occurring in all these states prior to
1990, before smoking bans were common. After 1990, local smoking bans began to
take effect in California, and smoking restrictions began to take effect in the
other states, so this is the period we have chosen for study.

Table I

Bar&Rest
retail1987

Bar&Rest
retail1990

Bar&Rest
retail1998

%growth
1990-98

Total Retail
1990

Total Retail

1998

%growth1990-98

CA

20.7

26.3

28.0

6.5

225

291

29

NY

10.8

13.1

13.8

5.3

124

148

19

MA

4.8

6.1

5.9

-3.3

50.7

62.6

23

VT

0.37

0.46

0.44

-4.3

4.5

6.0

33

UT**

0.78

0.94

2.1

123

10.6

19.3

82

USA

153

182

260

43

1807

2695

49

*USA-

116

135

210

56

1392

2168

56

*USA- is the USA data minus the data from CA, NY,MA,VT,
and UT; or the total of the 45 smoker friendly states and D.C.

**Utah had a 14% smoking rate in 1998, so the presence of
a ban there would not affect business as much as states with higher smoking
rates, which typically range from 22% to 29%.

The USA experienced bar and restaurant revenue growth of
19% between 1987 and 1990 and USA- experienced growth of 16% in the same
period indicating the not-yet smoker-unfriendly statescontributed the
extra +3% difference.Taken as combined data, bar and restaurant
revenue growth in California, New York, Massachusetts, Vermont, and Utah
exceeded the national trend.

The USA experienced bar and restaurant revenue growth of
43% between 1990 and 1998 and USA- experienced growth of 56% in the same
period indicating the now smoker unfriendly states contributed the loss
of-13%
difference. Taken as combined data, bar and restaurant revenue growth in
California, New York, Massachusetts, Vermont, and Utah lagged the national
trend from 1990 to 1998.

Except for Utah, all the smoker unfriendly states’ bar
and restaurantrevenue growth was substantially lower than total revenue growth.Since Utah had a
14% smoking rate in 1998, demand for smoking accommodations was too weak for a
ban to have much of an effect. Utah also hosted the 2002 Winter Olympics, and
by 1996, the economic impact of the preparations was already contributing to
the local economy, and the workers would have dined out frequently since they
were temporary residents.(www.olympic.utah.gov) In the other smoker
unfriendly states, bar and restaurant revenue growth under-performed total
revenue growth on average about 25%, which is close to the average adult
smoking rate of 21.7%in these states in 1998.

We examined the complete U.S. Dept of Commerce data set
referenced in the “background” section of this article and confirmed most of
the individual states not considered smoker-unfriendly by the Connecticut
research report fit the pattern of business growth similar to the USA- from
1990 to 1998.

If California’s bar and restaurant retail growth had kept
up with the smoker-friendly states ( USA-) between 1990 and 1998, California’s
bar and restaurant revenue would have grown from $26.3 billion in 1990 to $41
billion in 1998. (26.3 X 1.56) This is a bar and restaurant revenue loss of
$15 billion for 1998 alone.However, this trend had been going on for
eight years, and interpolatinga linear trend on the data, we find total
revenue loss for the eight-year period is $60 billion dollars. (1/2 the base X
the height)

Bar and Restaurant Revenue Growth in Smoker-friendly
States

The U.S. Center for Disease Control publishes MMWR, a
weekly update of health-related reports throughout the United States.In the June 25,
1999, edition, they published a report summarizing smoke-free indoor air laws,
and as of December 31,1998, 46 states and the District of Columbia restricted
smoking to some extent, but Alabama, Kentucky, Mississippi, and North Carolina
had no restrictions on smoking in any category including bars and
restaurants.

In the same manner above, utilizing the same data
resources, we have tabulated the most smoker-friendly states:all data in
billions of dollars.

Table II

Bar&Rest retail 1990

Bar&Rest retail 1998

% growth

Total Retail 1990

Total Retail 1998

% growth

AL

2.2

3.3

50

26.4

39.9

51

KY

2.2

3.5

59

23.9

36.8

54

MS

1.1

1.6

45

13.8

20.8

51

NC

4.5

8.0

78

45.7

81.1

77

Ave

58

58

USA

182

260

43

1807

2695

49

USA-

135

210

56

1392

2168

56

USA--

172

244

42

1697

2516

48%

USA- is USA minus the smoker-unfriendly states from Table
I, for comparison.

USA-- is USA minus the smoker-friendly states.

The most smoker-friendly states’ average growth in bar
and restaurant revenues matched their average total retail revenue growth of
58%.The
USA-, which do not contain data from the smoker-unfriendly states from Table
I, also matched their bar and restaurant revenue growth with their total
retail growth of 56%.However, USA, and USA-- in Table II
under-perform the smoker-friendly states because they contain the data from
the smoker-unfriendly states. Thus far, the only states whose bar and
restaurant revenue did not grow as fast as their total retail revenue are the
states which were smoker-unfriendly ( except Utah), or total USA dataand USA-- which
are terms which both included the smoker-unfriendly states. Most importantly,
if claims were true that smoking bans are good for bar and restaurant
business, then the lack of smoking bans should be bad for those businesses. However, we have
found the lack of any smoking restriction or ban law does not adversely
influence bar and restaurant revenue growth when compared to the states with
reasonable smoking restrictions.

Considering the smoker-friendly states’ bar and
restaurant revenue growth data, we conclude that nonsmokers do not patronize
bars and restaurants less often when state or local governments don’t severely
restrict or ban smoking.More than 70% of adults in these smoker
friendly states do not smoke, but seem as willing as nonsmokers in states with
moderate smoking restrictions to patronize bars and restaurants. The four most
smoker-friendly states do not prohibit any individual bar or restaurant from
banning smoking, if it is what the owner determines is best for business. It is obvious our
free-market economic system, without any smoking laws at all, and leaving the
smoking policy decisions in control of the owner, works to satisfy all
customers.

Bar and Restaurant Revenue Growth in the Border
States

California is bordered by Arizona, Oregon and Nevada. All
U.S. Dept. of Commerce data are in billions of dollars.

Table III

Bar and Rest retail 1990

All retail except Bar&Res, 1990

Bar and Rest retail1998

B&R % growth

All Retail except Bar&Res, 1998

% growth

CA

26.3

198.7

28.0

6.5

262.9

32.3

AZ

2.6

23.5

6.1

135

42.9

82.6

OR

2.4

20

3.1

29.2

34.6

73.0

NV

1.0

8.6

2.7

170

19.2

123

Smoker-friendly Arizona’s bar and restaurant revenue
growth exceeded its other retail growth by a margin of 135 : 83, Oregon’s
lagged 29 : 73, and Nevada’s exceeded by 170 : 123.Averaging these
margins, the combined three states’ bar and restaurant revenue growth exceeded
all other retail by a margin of 111 : 93.California’s other retail grew 32.3% from
1990 to 1998, and based on the smoker-friendly border states’ average margin,
California’s bar and restaurant revenue growth should have been (111 divided
by 93 times 32.3=) 38.6%Since the actual growth was 6.5%, we attribute the difference of 32.1%
to local and state smoking bans.

If California’s bar and restaurant margin-adjusted
revenue growth had kept pace with its border states, its bar and restaurant
revenue for 1998 would have been $36.5 billion, or $8.5 billion
more than it actually took in. Over the time span of 1990 to 1998, California
lost $34 billion based on (1/2 base X the height) calculations. This disagrees
with our earlier estimate of $60 billion because these calculations take into
account a slightly weaker overall economy in California than its border
states.While directly comparable government tabulated figures do not exist for
the years of 1999 to 2004, it would not be unreasonable to assume that these
trends have continued and that California’s smoking ban has cost the state’s
economy on the order of$75 to $100 billion since 1990.

However, this calculation may underestimate California’s
bar and restaurant losses because they are calculated by comparing to
California’s all retail except bar and restaurant growth which also would have
been higher without smoking bans. This would happen if California’sbar and
restaurant employees and owners also lost wage growth corresponding to the
25.8% difference between all retail except bar and restaurant revenue growth
and bar and restaurant revenue growth. Therefore, those owners and employees
would be 25.8 % less able to contribute to all retail except bar and
restaurant revenue growth than they otherwise would have been, and may have
adversely affected total retail growth in addition to the $8.5 billion loss in
1998 directly attributable to the ban. In summary, California’s smoking ban probably contributed
to its overall economic problems since the late 1990s beyond the direct impact
of the contribution of lower bar and restaurant total revenues.

One should note earlier we found California and other
smoker unfriendly states lagged the national trend of bar and restaurant
revenue growth between 1990 and 1998.As the combined data from Arizona, Oregon
and Nevada clearly show, the aggregate of these other western states did not
lag the national trend. Most of California’s population lives too far from the
borders for California smokers to commute easily for the purposes of
patronizing smoker-friendly establishments in those states.Therefore we do
not believe these states benefited from California’s smoking ban. Lastly, the
combination of lack of opportunity for California smokers to commute and the
finding of California’s under- performance in bar and restaurant revenue
growth prove that when a “level playing field” environment is imposed, all
bars and restaurants still lose business even in a state as large as
California.It is not possible
to “trap” smokers in a ban environment and expect them to patronize
establishments subject to bans as much as they did before the bans were
imposed. The “playing field” of a large scale smoking ban may be level but it
is far more of a level basin than a level plateau.

Conclusions:

Total bar and restaurant revenue growth in
California and other smoker-unfriendly states did not keep pace with those
states’ other retail businesses or our nation’s overall bar and restaurant
retail growth 80% of the time.The overall order of magnitude of the bar
and restaurant retail growth losses in all smoker unfriendly states, except
Utah, was about 25%.

Bar and restaurant revenue growth in states with no
smoking restrictions did as well as states with reasonable smoking
restrictions.Claims the public demands smoking restrictions or eliminations, if
true, would have caused states with no restrictions to lose bar and restaurant
revenue growth relative to other retail revenue growth.

There were no regional business conditions that could
have explained the bar and restaurant revenue losses California experienced
from 1990 to 1998. Although California’s border states had overall retail
revenue growth in excess of California’s even after adjusting for the overall
retail growth data, California’s bar and restaurant businesses still lost
growth than cannot be explained without considering the smoking bans.

Claims studies can only find smoking bans are bad for
business when funded by Big Tobacco or its affiliates, or use anecdotal data
are not true. We have shown smoking bans hurt bar and restaurant businesses
80% of the time using data from the U.S. Dept of Commerce. Further, most
studies which find bans don’t hurt business are at odds with our conclusions
because they use tax revenue and employment data to determine ban effects; and
fail to measure for a sufficient length of time before bans take effect and a
sufficient length of time after bans take effect.

DISCLOSURES:

The authors, used their own time and funds to research
and prepare this article. Neither has any competing financial interest in this
research or the outcome of this research.

Dave Kuneman, who
smokes, worked for 6 years in the 1980s as a research chemist for Seven-Up and
still draws a small pension from that work.At the time of his employment
Seven-Up was owned by Philip Morris.His current work and concern in this area
has no connection to that employment.

Michael J.
McFadden does not have any financial connections or obligations to Big
Tobacco, Big Hospitality, Big Pharma, or other major players in this
fight.He is
a smoker, a member of several Free-Choice groups, and the author ofDissecting
Antismokers’ Brainsand Stopping A Smoking Ban.